Tuesday, September 29, 2009

What Does Pakistani Democracy Deliver?

In an Op Ed piece published in Pakistani newspaper "the News" recently, Ms. Farahnaz Ispahani, the wife of Pakistani Ambassador in Washington and a close Zardari aide, claims "democracy does deliver". She proudly talks about her government's success in tripling of the US non-military aid to $1.5 billion a year "to the dismay of the government's detractors and contrary to the vilification campaign going on in the country against the elected leadership".

When Ms. Ispahani says that "democracy does deliver", what she really means is that democracy delivers US aid to her government. The underlying assumption appears to be that such aid alone will solve Pakistan's current economic problems. However, she does not mention Pakistan's serious economic decline, mounting job losses and rising poverty since her party took control of the government in 2008, nor does she make any reference to the ominous conditions attached to the US aid bill and the serious concerns by the US about PPP's corrupt leadership siphoning off the funds provided by the Americans. Here is some context to the declaration of victory by Zardari's spokesperson Ispahani in getting US aid:

Pakistan's Recent Economic Performance:

According to Economic Survey 2008-09, presented by Finance Minister Shaukat Tarin, Pakistan's economy grew by a mere 2.0 percent, barely keeping pace with population growth. The growth fell significantly short of the 4.5 percent target for the year, which was already very modest compared with an average of 7% economic growth witnessed from 2001-2008.

The manufacturing sector contracted by 3.3 percent in 2008-09 as compared to expansion of 4.8 percent last year and target of 6.1 percent. Small and medium manufacturing sector maintained its healthy growth of last year at 7.5 percent.

Large-scale manufacturing experienced contraction of 7.7 percent compared with expansion of 4.0 percent in the last year and 5.5 percent target for this year. The massive contraction has been because of severe power outrages, bad governance, security environment and political disruption in 2008-2009. The services sector grew by 3.6 percent, missing the target of 6.1 percent and last year’s actual growth of 6.6 percent.

The growing lines of poor people lining up for free food paid for by philanthropists at some restaurants and charitable institutions offer significant anecdotal evidence of rising poverty from widespread job losses since last year.

US Aid Strings:

The list of conditions attached to the US aid bill, also known as Kery-Lugar bill, affect almost all of the Pakistani stakeholders, including Pakistani military, the intelligence agencies and the people of Pakistan and the government's conduct of relations with Pakistan's neighbors such as India and Afghanistan.

According to the News, the newly approved US aid will be provided in multiple installments and the US Secretary of State will have to issue a certificate on these sensitive subjects before each installment of the US aid is disbursed.

The US Secretary of State, under the direction of the president, will have to certify to the appropriate congressional committees that:

1. Pakistan is continuing to cooperate with the United States in efforts to dismantle supplier networks relating to the acquisition of nuclear weapons-related materials, such as providing relevant information from or direct access to Pakistani nationals associated with such networks;

2. Pakistan during the preceding fiscal year has demonstrated a sustained commitment to and is making significant efforts towards combating terrorist groups, consistent with the purposes of assistance described in section 201, including taking into account the extent to which the Government of Pakistan has made progress on matters such as:

(a) ceasing support, including by any elements within the Pakistan military or its intelligence agency, to extremist and terrorist groups, particularly to any group that has conducted attacks against United States or coalition forces in Afghanistan, or against the territory or people of neighboring countries;

(b) preventing al-Qaeda, the Taliban and associated terrorist groups, such as Lashkar-e-Taiba and Jaish-e-Mohammed, from operating in the territory of Pakistan, including carrying out cross-border attacks into neighboring countries, closing terrorist camps in the FATA, dismantling terrorist bases of operations in other parts of the country, including Quetta and Muridke, and taking action when provided with intelligence about high-level terrorist targets; and

(c) strengthening counter-terrorism and anti-money laundering laws; and

(3) the security forces of Pakistan are not materially and substantially subverting the political or judicial processes of Pakistan.

Renewed Corruption Charges:

It was only in 2007 that President Asif Ali Zardari returned to Pakistan under an amnesty, euphemistically called National Reconciliation Ordinance (NRO), sponsored by the Americans. However, the Americans know that the corruption charges against Zardari were credible and he, along with his late wife, was convicted in at least one case by a Swiss judge. The conviction was under appeal in Switzerland when Pakistan government withdrew all charges pursuant to the NRO signed by then President Musharraf under pressure from the Americans.

Now, the Obama administration officials are debating how much of the assistance should go directly to a government that has been widely accused of corruption, according to a report in the New York Times. The American aid officials believe that they need to assist the Pakistani economy directly in view of the renewed corruption allegations against the government of Mr. Zardari for its handling of the recent power shortages. The nation-wide power outages which have contributed to Pakistan’s first year of negative industrial growth this decade.

There have been widespread complaints in Islamabad, including by Finance Minister Shaukat Tarin, that the government had solutions to improve the power output but was refusing to implement them in order to benefit a handful of power plant operators, such as those supplying rental power at exorbitant rates, while the IPPs are not being paid for supplying power from currently underutilized installed capacity. Requests for information by Transparency International Pakistan regarding rental power contracts have been ignored by the Ministry of Water and Power. There are widespread corruption allegations against Mr. Zardari personally who has influenced the award of the 783 MW rental power contracts to a former governor of Oklahoma and his Pakistani partner.

Here is the full text of the Ispahani's opinion published in the News today:

Much to the dismay of the government's detractors and contrary to the vilification campaign going on in the country against the elected leadership, the US Senate voted on Thursday to triple non-military aid to Pakistan to roughly $1.5 billion per year.

The bill, approved unanimously, had been agreed upon between the Senate and House sponsors of legislation passed separately by each chamber earlier this year. The sponsors are Senators John Kerry and Richard Lugar. The bill has incorporated improvements over the earlier version of the Kerry-Lugar Bill passed by the Senate and the House. The vital aspect of the bill is that its language is far less prescriptive and stringent. Specific references to India as well as A Q Khan have been eliminated while the language related to nuclear proliferation is markedly toned down from "ensure access of US investigators to individual suspected" to receiving cooperation "in efforts such as providing relevant information from or direct access to Pakistani nationals associated with such networks."

On Thursday, for the first time ever, major economic powers agreed to the formation of a multi-donor trust fund (MDTF) to help the country build its tribal areas which have been the worst victim of the fight against the militants.

In an unprecedented show of solidarity President Barack Obama, President Asif Ali Zardari and Prime Minister Gordon Brown co-chaired the meeting of Friends Democratic of Pakistan (FoDP). The participants included a galaxy of world leaders, such as President Sarkozy of France, Prime Minister Berlusconi of Italy, Turkish Prime Minister Erdogan, the prime ministers of Australia and Canada and World Bank president Robert Zoellick. Foreign Minister Shah Mahmood Qureshi termed the summit a "diplomatic success," stating that it represented a vote of confidence in the Pakistani nation.

British Prime Minister Gordon Brown applauded Islamabad's campaign to rid the restive border areas of violent extremism and bring stability to the region. The British leader commended the leadership of President Zardari and the role of the armed forces for launching an effective offensive against the militants.

Earlier, US President Barack Obama reaffirmed his administration's commitment to economic cooperation with Pakistan.

The total amount of the bill passed by US Senate for FY 2009 is $3021.0 million. $1147.5 million would be given under the head of Development and Reconstruction out of which $33.5 million will be given under the head of Child Survival and Health Programme whereas Economic Support Fund would receive $1,114.0 million while $11,02 million will be made available for the country in FY2010 with $27.9 million and $1,074.3 million on Child Survival and Health Programme and Economic Support Fund respectively.

Pakistan will receive a total of $1103.1 million under the head of Security Assistance out of which foreign military financing would be $300.0 million this year whereas $700.0 million have been allocated for Pakistan Counter Insurgency Fund; $13.3 million would be spent on Non-Profit, Antiterrorism, Demining and Related Issues. International Narcotics and Law Enforcement would receive a total of $87.5 million while $2.3 million would be spent under the Head of IMET. It is worth mentioning here that $298.0 million, $22.7 million, $155.2 million and $ 4.0 million respectively would be given to the country under the same head in FY2010.

Pakistan will receive a total of $255.4 million under the head of humanitarian grant; further details are that Migration and Refugee Assistance will be given $69.6 million while Food for Progress will get $31.0 million, PL480 $36.3 million and International Disaster Assistance will be given $118.0 million in the FY 2009. Migration and Refugee Assistance will receive $20.0 million while no money has been reserved for Food for Progress, PL and International Disaster Assistance in the FY 2010. Total State Department operations will entail $2,506.0 million in this financial year whereas it would be $1602.0 million in the next financial year.

The Department of Defence will receive a total of $515.6 million in which Counter- Narcotics will receive an amount of $63.3 million this year and $38.4 million in the next financial year while $25.0 million have been reserved for FATA Authority this year. Ensuring that the present government does not face any obstacle in its democratic dispensation a condition in the bill requires that the security forces of Pakistan do not subvert judicial processes. The aim of the legislation is to promote stability in the country.

It is worth mentioning that the bill underlines the importance of supporting Pakistan's national security needs to fight the ongoing counterinsurgency and improve its border security and control. However, it does not specify any amount or percentage. This provides the administration maximum flexibility and none of the conditions can set in motion automatic sanctions.

Previously, Pakistan was governed by a dictator and that regime weakened all our important institutions like the judiciary and the parliament. Even the media was brutalised and attacked when the crunch came. Today all our institutions are working for the betterment of the people. The judiciary and the parliament are respected by the executive. The media is free to examine and comment on the working of the government. Internationally, Pakistan stands in the strongest diplomatic position in its sixty two year history. Our leaders now stand shoulder to shoulder with the leaders of other democracies. And perhaps the most important message that President Zardari sends to our nation and to the world is that democracy does indeed deliver.


Even if the current Pakistani government does succeed in effectively responding to the concerns of the foreign aid donors regarding transparency in the use of funds and Pakistan's sincerity in fighting terrorism, it is extremely important to recognize that there can be no real economic progress, measurable poverty reduction and visible human development that translate into winning the hearts and minds of the people, unless there are good policies and competent governance in the country.

Related Links:

Good Governance Reform Agenda in Pakistan

Asian Development Bank Partnership with Pakistan
Pakistan Economic Survey 2008-2009

Pakistan Economic Survey 2008-2009

Pakistan Economic Slump Hurts Workers

Musharraf's Economic Legacy

Zardari Corruption Probe in Switzerland

US Fears Pakistan Aid Bill Will Feed Graft

USAID, Democracy and Governance in Pakistan

Kerry-Lugar Test


Anonymous said...

Pakistanis are one of the strangest people. When Mushy was ruling they were demonstrating FOR democracy. Now that they got what they wanted, opinions are expressed that that Democracy is Democrazy in Pakistan.
May be Khilafat rule is better in Pakistan.

Anonymous said...

here is an excellent article on why Pakistan is doomed
From that article
One fundamental assumption that all too many Pakistani officials hold is that when something goes wrong with society, it is because the people have faltered in their fidelity to Islam, and only renewed religious fervor can solve the problem and restore prosperity to the nation and health to the society. This assumption militates against the idea that any amount of American aid will significantly alter the situation in Pakistan, or lessen popular support for the Islamic jihad of the Taliban and allied groups. For the Americans will always, no matter how much money they lavish upon the Islamic Republic of Pakistan, be infidels. The solution to Pakistan’s problems will not be seen as lying with them, but with a renewed commitment to Islam.

It is tragic that Pakistan is held to ransom by Islam, a religion which has no place in this century.

Riaz Haq said...

Anon: "One fundamental assumption that all too many Pakistani officials hold is that when something goes wrong with society, it is because the people have faltered in their fidelity to Islam..."

If these "Pakistani official" are really so devout, then why is it that most of them do not follow the very basic commandments of Islam that requires them to make an honest living? Why does Pakistan show up as one of the most corrupt nations in Transparency International surveys?

So I fundamentally disagree with this characterization of Pakistan officials by the author of Front Page.

It's simply wrong and bigoted to blame a religion like Islam, or any other religion for that matter, for the all the flaws of those profess to be followers of the religion. If we follow this logic, then you's have to hold Catholicism responsible for the excesses by Hitler and the IRA, and you'd hold Judaism responsible for the atrocities committed by Israelis against Palestinians, etc.

Anonymous said...

It look like that america does not believe like india. New item of times of india quoting us reporting :

LeT all set to attack India again: Report

ISI Knew Of 26/11 Plot To Hit Mumbai, Say Lashkar Jihadis

Lydia Polgreen & Souad Mekhennet

Karachi: Ten months after the devastating attacks in Mumbai by Pakistan-based militants, the group behind the assault, Lashkar-e-Taiba , remains largely intact and determined to strike India again, according to current and former members of the group,and intelligence officials.
Despite pledges from Pakistan to dismantle militant groups operating on its soil, and the arrest of a handful of operatives, Lashkar has persisted, even flourished, since the Mumbai carnage on November 26 last year.
Indian and Pakistani dossiers on the Mumbai investigations, copies of which were obtained by The New York Times, offer a detailed picture of the operations of a Lashkar network that spans Pakistan. It included four houses and two training camps in this sprawling southern port city that were used to prepare the attacks.
Among the organizers, the Pakistani document says, was Hammad Amin Sadiq, a homeopathic pharmacist, who arranged bank accounts and secured supplies. He and six others begin their formal trial on Saturday in Pakistan , though Indian authorities say the prosecution stops well short of top Lashkar leaders.
Indeed, Lashkars broader network endures , and can be mobilized quickly for elaborate attacks with relatively few resources, according to a dozen current and former Lashkar militants and intelligence officials from the US, Europe, India and Pakistan. In interviews with NYT, they presented a troubling portrait of Lashkars capabilities, its popularity in Pakistan and the support it has received from former officials of Pakistans military and intelligence establishment.
Pakistani officials say that after September 11, 2001, they broke their contacts with the group. No credible evidence has emerged of Pakistani government involvement in the Mumbai attacks, according to an American law enforcement official.
But a senior American intelligence official said the ISI was believed to maintain ties with Lashkar. Four Lashkar members, interviewed individually, said only a thin distance separated Lashkar and the ISI, bridged by former ISI and military officials.
One highly placed Lashkar militant said the Mumbai attackers were part of groups trained by former Pakistani military and intelligence officials at Lashkar camps. Others had direct knowledge that retired army and ISI officials trained Lashkar recruits as late as last year.
By all accounts Lashkars network, though dormant, remains alive, and the possibility that it could strike India again makes Lashkar a wild card in one of the most volatile regions of the world. The Pakistani investigation concludes beyond any reasonable doubt that it was Lashkar militants who carried out the Mumbai attacks. NYT NEWS SERVICE

Enemy At The Gates

4 LeT men confirm ISI is still in touch with Lashkar, through former ISI and military officials A highly placed Lashkar militant says Mumbai attackers were part of groups trained by former Pakistani military and intelligence officials last year at Lashkar camps Lashkar funding and membership have risen since 26/11. It may now have a staggering 1.5 lakh members ISI officials insist they broke contact with LeT and Taliban after 9/11. Say it might have been better if they had not cut ties, so that we could control them more

Related Articles

US wary of fresh LeT attack consequence

Front Page [Next]


Copyright © 2009 Bennett Coleman & Co. Ltd. All rights reserved.

Anonymous said...

If we follow this logic, then you's have to hold Catholicism responsible for the excesses by Hitler and the IRA, and you'd hold Judaism responsible for the atrocities committed by Israelis against Palestinians, etc.

You see the trouble is, islamist terrorist proudly quote quran and its verses after committing their act of terrorism. Words like Jihad, Kuffar are quoted freely. Once they stop justifying their dastardly acts via Quran, the world will stop blaming Islam for terrorism. As simple as that.
Plus another regrettable fact is while all muslims are not terrorists, all terrorists are muslims.

Anonymous said...


I donot think so it is so straight forward. Invariably the persecution happens more on the basis of religion.

Hitler persecuted jews
Islam persecuted parsi [ moved to india ]
Isreal is persecuting muslims.
Pakistan persecutes non-muslims.

Riaz Haq said...

Anon: "Plus another regrettable fact is while all muslims are not terrorists, all terrorists are muslims."

Do you think the Tamil Tigers terrorists who were just defeated were Muslims? Do you believe the RSS/VHP terrorists responsible for massacres of Muslims and Christians were not Hindus?

Anon: "You see the trouble is, islamist terrorist proudly quote quran and its verses after committing their act of terrorism."

So just the fact any misguided, ignorant person erroneously quotes from the Quran out of context is sufficient to blame Islam? I think you are nothing but a bigot, if you believe that Islam, or any other religion you happen to dislike, should be blamed for the atrocious behaviors of any of its followers.

Riaz Haq said...

Anon: "Hitler persecuted jews
Islam persecuted parsi [ moved to india ]
Isreal is persecuting muslims.
Pakistan persecutes non-muslims."

When you make such statements, who do you conveniently leave out persecution, rapes and massacres of Muslims and Christians by Hindus? What does that say about your objectivity?

Anonymous said...


I had purposefully left it as it does not happen with the blessings of the government. Further hindus are not as professional as their abrahamic counterparts.

Global village and communication is pushing the traditional hindus also to catch up with their abrahamic counterparts.

Pls read carefully the massacres done by bangadesh muslim to hindus and google and read the confession of godse. No politicians worth his name in india has got the balls to unclassify the argument of a murder even after 60 years. That tell the truth of fear of backlash if his court argument are let out.

Riaz Haq said...

Here is an interesting opinion by Dr. Muzaffar Iqbal about the latest US aid bill published in the News today:

Reminiscent of the Government of India Act of 1858, the "Enhanced Partnership with Pakistan Act of 2009" gives the government of the United States the moral, economic, and political role of civilizing the natives of Pakistan by determining the kind of education, social assistance, military and civil programs this country should have. Instead of the viceroy, it is the Secretary of State who will be submitting periodic reports to the US President on progress made on this mission. Section 5(b)(1)(A) of the bill requires that "none of the amounts appropriated may be made available after the date of the enactment of this Act for assistance to Pakistan unless the Pakistan Assistance Strategy Report has been submitted to the appropriate congressional committees in accordance with subsection (j)."

In general, the so-called assistance to be provided to Pakistan under this act, relates to the following broad categories: "(A) Civil liberties; (B) Political rights; (C) Voice and accountability; (D) Government effectiveness; (E) Rule of law; (F) Control of corruption;(G) Immunization rates; (H) Public expenditure on health; (I) Girls' primary education completion rate; (J) Public expenditure on primary education; (K) Natural resource management; (L) Business start-up; (M) Land rights and access; (N) Trade policy; (O) Regulatory quality; (P) Inflation control and (Q) Fiscal policy." Taken together, this leaves hardly anything outside American control and influence.

Riaz Haq said...

Anon: "I had purposefully left it as it does not happen with the blessings of the government. Further hindus are not as professional as their abrahamic counterparts."

The 2002 massacre of Muslims in Gujarat as organized and executed with the support of Chief Minister Modi as has been established by various independent journalists (Tehelka.com) and human rights orgs. And Modi and his fellow mass murderers have escaped any accountability so far and continue to remain in power in Gujarat.

In his 2004 book, a University of Washington researcher Paul Brass talks about an “institutionalized riot machine” in India that organizes violence and murders of Muslims in almost all parts of India regularly.


Anonymous said...

Riaz, You wanna bet on this. Number of muslims killed in Pakistan is more than in India. Add up all killings done in Pak and compare it with India. No Pakistani wants to talk about regular killing of shias, ahemdiyas.

And why do you completely censor 1971?

Riaz Haq said...

Anon: "Number of muslims killed in Pakistan is more than in India. "

Let me first remind you that you have drifted far off the contents of the post here.

But I am still not sure what your point is? First, it is ridiculous to claim any comparison between Muslims in India and Pakistan. Muslims in India have fared far worse than Muslims in Pakistan in almost every way: education, income levels, opportunity to study an work abroad, health indicators, employment, police witch hunts etc as pointed out by the Sachar Commission Report.

From my own experience of living in the US and my visits to India, I see very few Indian Muslims working in professional jobs in the United States, even though the population of Muslims in India is larger than in Pakistan...most of the Muslims here in IT jobs, Medicine, Law, Accounting and other professions are from Pakistan.

Second, even if one concedes that your statement is correct, then one has to wonder why a "secular democracy" wants to justify the killing of minorities based on any atrocities committed in a neighboring Islamic Republic that makes no pretense to the high moral ground of a "secular democracy" and "tolerance" and "embracing diversity".

You really need to read the Paul Brass book "The Production of Hindu-Muslim Violence in Contemporary India" to learn the facts rather than argue out of ignorance.

Anonymous said...

In UK muslims are at the bottom of the society. Are Hindus to blame there too?
Take a look at India's two neighbors. Pak and Bdesh. Both of them are a basket case. If muslims can't help themselves in muslim countries itself, why do you expect muslims to do well in non islamic countries.

And if you muslims don't want to take the high road of secularism, then please also don't take the high road of 'islam-is-a-religion-of-peace'. Can't pick and choose, OK? Looking at the islamic world, One can easily prove islam is not a religion of peace. When they are not at peace at their home turf, any surprise that they are at war with the west.

Riaz Haq said...

Anon: "Pak and Bdesh. Both of them are a basket case. If muslims can't help themselves in muslim countries itself, why do you expect muslims to do well in non islamic countries."

You continue to stray from the topic at hand. But let me humor you for just this comment.

Your information is absolutely incorrect. Pakistan is definitely not a basket case. In fact, by most accounts of independent observers and my own personal observations from the visits to both nations, Pakistanis enjoy a visibly higher std of living than their Indian counterparts.

Since you mentioned UK, let me quote from British writer William Dalrymple who visited both India and Pakistan and offered this in a piece he wrote for Guardian:

"On the ground, of course, the reality is different and first-time visitors to Pakistan are almost always surprised by the country's visible prosperity. There is far less poverty on show in Pakistan than in India, fewer beggars, and much less desperation. In many ways the infrastructure of Pakistan is much more advanced: there are better roads and airports, and more reliable electricity. Middle-class Pakistani houses are often bigger and better appointed than their equivalents in India.
Moreover, the Pakistani economy is undergoing a construction and consumer boom similar to India's, with growth rates of 7%, and what is currently the fastest-rising stock market in Asia. You can see the effects everywhere: in new shopping centers and restaurant complexes, in the hoardings for the latest laptops and iPods, in the cranes and building sites, in the endless stores selling mobile phones: in 2003 the country had fewer than three million cellphone users; today there are almost 50 million."


As to Muslims doing well in non-Muslim countries, let me suggest you read the following:

"In fact, their quality of life indicators are higher than for most other Americans, except for American Jews, according to a recent Gallup poll in US. The only countries where Muslims are more likely to see themselves as thriving are Saudi Arabia and Germany, according to the poll. For example, 41% of American Muslims say they are thriving, as compared to 51% of Saudis, 47% of German Muslims and only 11% of Pakistanis. Among the prominent Muslim nations surveyed by Gallup, Pakistanis are among the most dissatisfied in their home country, with 44% reporting they are struggling and 45% saying they are suffering. In sharp contrast to Pakistanis, Bangladeshis report higher levels of satisfaction, with 17% thriving and only 8% saying they are suffering. In spite of the high Muslim political representation in Britain, only 7% British Muslims say they are thriving, lower than the 11% in Pakistan. South Asian results appear to correlate well with the world happiness index ranking that shows Bangladesh ahead of both India and Pakistan in terms of happiness."


Please try to get over your ignorance. It doesn't help you see reality.

Riaz Haq said...

NY Times is reporting considerable opposition in Pakistan to the latest aid package and strings. Here's an excerpt:

Steps by the United States to vastly expand its aid to Pakistan, as well as the footprint of its embassy and private security contractors here, are aggravating an already volatile anti-American mood as Washington pushes for greater action by the government against the Taliban.

An aid package of $1.5 billion a year for the next five years passed by Congress last week asks Pakistan to cease supporting terrorist groups on its soil and to ensure that the military does not interfere with civilian politics. President Asif Ali Zardari, whose association with the United States has added to his unpopularity, agreed to the stipulations in the aid package.

But many here, especially in the powerful army, object to the conditions as interference in Pakistan’s internal affairs, and they are interpreting the larger American footprint in more sinister ways.


Riaz Haq said...

Here is a report about 50 percent plunge in FDI for Pakistan:

Foreign direct investment inflows in the first quarter of this fiscal year were down by more than 50 percent as compared with the same period of last year, according to official data released here on Thursday.

The country attracted only $463 million in July-September of 2009, lower by 58.5 percent, than $1.116 billion in the same quarter of last year. Inflows of portfolio investment, however, were encouraging. They stood at $208.1 million in the first quarter of this year compared with outflow of $172.9 million in the first quarter of last year.

Net inflow of investment into the country fell by 28.9 percent to $671.1 million from $943.4 million.

Foreign investment inflows stood at $3.719 billion in 2008-09, down by 31.24 percent from $5.409 billion in 2007-08.

The worsening security environment has jolted the economy. Over the last two years, there have been 118 suicide bombings that killed more than 1,400 people and injured countless others. According to government estimates, the conflict is causing the economy an annual loss of $5 billion (3% of GDP) in direct and indirect costs. Lower investment in the economy will hurt the medium-term growth prospects, pushing more people below the poverty line, with inevitable political consequences. The country might soon attract huge investments in the agriculture sector by Arab states who seek to ensure food supplies by buying farmlands in Pakistan. The government has held talks with Arab investors in this regard, but has faced strong opposition at home.

The country attracted large foreign investments in recent years, particularly in telecom, banking and oil and gas exploration sectors. While oil and gas exploration continues to attract investments, the other two sectors have received little investment in recent past. The entry of Barclays, a large British bank, in Pakistan and purchase of MCB Bank's 20 percent shares by Maybank, a large Malaysian bank, have been the major foreign investments in the banking sector recently.

In the telecom sector, the entry of China Mobile, which bought Paktel, was the last major foreign investment. The country continues to fail to attract any major investment in manufacturing sector, which provides the largest number of jobs in urban areas.

Riaz Haq said...

BBC website has a pictorial today of charities feeding the poor. One picture shows the big kitchen of one charity alone that feeds 40,000 people every day in Karachi.


Riaz Haq said...

President Asif Zardari's total assets are estimated at $1.5 billion, according to a NAB filing with Pakistan Supreme Court, reports the News:

ISLAMABAD: The National Accountability Bureau (NAB) on Tuesday submitted in the Supreme Court the list of the NRO beneficiaries, which showed President Asif Ali Zardari possessing assets worth $1.5 billion (Rs 120 billion) abroad and worth Rs 24.14 billion in the country.

Deputy Prosecutor General Abdul Baseer Qureshi presented the list of 248 NRO beneficiaries before the full court, hearing the petitions challenging the infamous ordinance, promulgated in 2007 giving legal cover to the corruption of politicians and bureaucrats

A 17-member bench of the apex court, headed by Chief Justice Iftikhar Muhammad Chaudhry, had directed the NAB the other day to submit authentic details of the NRO beneficiaries. According to the list, there are at least seven abolished references against President Zardari. The list indicates that the assets of President Asif Ali Zardari in foreign countries stand at $1.5 billion, including houses and bank accounts in Spain, France, the US and Britain while his assets in the country stand at Rs 24.14 billion.

In the list, President Zardari’s assets worth Rs 22 billion were mentioned as beyond means and the cases in this regard were withdrawn by the Accountability Court on March 5, 2008, under the controversial NRO.

Similarly, cases of corruption of Rs 268.3 million regarding the purchase of Ursus Tractors (Awami Scheme) and illegal construction of the polo ground at the PM House at the cost of Rs 52.297 million were terminated under the NRO in March 2008.Likewise, the list also includes allegedly causing loss of Rs 1.822 billion to the national exchequer by President Zardari by granting licence to the ARY Gold. The said case was also terminated under the NRO ordinance.

The NAB deputy prosecutor general told the court that information regarding the misuse of authority in affairs of SGS PSI Company by Asif Ali Zardari as well as illegal award of contract to Cotecna for pre-shipment was being collected.

The NAB list included names of Interior Minister Rehman Malik, Pakistan’s Ambassador to United States Hussain Haqqani, Defence Minister Chaudhry Ahmed Mukhtar, former NWFP chief minister Aftab Sherpao Khan, ex MNAs Nawab Yousaf Talpur, Anwar Saifullah Khan, Sardar Mansoor Leghari, Haji Nawaz Khokhar, Pir Mukarramul Haq, Brig (retd) Imtiaz, Usman Farooqi, Salman Farooqi, former president Habib Bank Younus Dalmia, Mirbaz Khetran and many others.

He submitted that the National Assembly’s standing committee approved the NRO, however, the concerned minister took it back from the assembly. During the proceedings, advocates general of the Punjab, the NWFP and Balochistan informed the court that under Section 2-A of NRO, no review boards were constituted in their respective provinces to decide the murder cases.

Advocate General Sindh Yousaf Leghari, however, informed the court that 8,000 cases were dropped under the NRO in Sindh, of which 3,000 were murder cases. He sought time to provide details of the cases decided under Section 2-A of the NRO in Sindh. The court directed the AG Sindh to submit report before the court today (Wednesday).

Abdul Hafeez Pirzada, counsel for Dr Mubashar Hassan, submitted the ordinance as whole was void because it was a fraud ordinance as it violated many substantial provisions of the Constitution.

He submitted that reconciliation meant reconciliation between husband and wife, between parents but this National Reconciliation Ordinance had trampled the rights of the entire nation. Pirzada contended that all stakeholders were not taken into confidence before its promulgation. “The nation is threatened with fragmentation,” Pirzada maintained.

Riaz Haq said...

Here's an AFP report about World Bank aid to India to clean up Ganges:

(AFP) – Dec 2, 2009

NEW DELHI — The World Bank said Wednesday it will give India at least one billion dollars to help clean up the heavily polluted holy river Ganges as part of moves to sharply hike lending to the country.

The Ganges clean-up involves building modern sewage treatment, revamping drains and other measures to improve the quality of the sacred river which has been badly dirtied by industrial chemicals, farm pesticides and other sewage.

"The World Bank is helping the government of India in its recently launched program to clean and conserve the Ganga (Ganges) River with an initial assistance of one billion dollars to be provided over the next four-to-five years," the multilateral lender said in a statement.

India's environment minister hailed the World Bank's support for cleaning up the river, known to Hindus as "the Mother Ganges."

"This is a project of enormous national importance and I am pleased that the World Bank has come forward to assist us," Ramesh said at a joint news conference in New Delhi with visiting World Bank chief Robert Zoellick.

The announcement came after the finance ministry earlier Wednesday said the World Bank was expected to triple lending this year to India to seven billion this year for development, infrastructure and other projects.

The sum is three times the average 2.3 billion dollars the Bank has loaned India annually over the past four years.

Zoellick is on a four-day visit to the country.

India already has 19.57 billion dollars in World Bank loans that are supporting 68 development, infrastructure and other projects and is the Washington-based financial institution's biggest borrower.

As part of the seven billion dollars in lending this year, the World Bank in September announced 4.3 billion dollars in loans to help strengthen India's economy amid the global economic crisis.

Zoellick wrote in the Hindustan Times newspaper Wednesday that India faces enormous challenges.

But "if it can remove (infrastructure) bottlenecks that slow its economy, then India is well positioned to become one of the new poles of global growth."

The world financial system "needs to accommodate India and other powers whose growth rates far exceed those of developed countries," Zoellick said.

As India's economy returns to growth rates of eight-to-nine per cent, "we can expect it to grow not only as a market but as a supplier of a range of services and increasingly knowledge-intensive goods," Zoellick said.

Earlier this week, India reported quarterly growth rose 7.9 percent from a year earlier, underscoring what analysts said has been the country's faster-than-expected recovery from the global slump.

The finance ministry said Mukherjee pressed Zoellick for swift completion of reforms to give a greater voice to developing nations at the World Bank.

In September, leaders at a Group of 20 summit in the US city of Pittsburgh backed plans to give developing countries greater voting rights at the World Bank and the International Monetary Fund.

Riaz Haq said...

Here's an excerpt from an interesting opinion by Jeffrey Sachs published in Christian Science Monitor:

Those who contend that foreign aid does not work - and cannot work - are mistaken. These skeptics make a career of promoting pessimism by pointing to the many undoubted failures of past aid efforts. But the fact remains that we can help ensure the successful economic development of the poorest countries. We can help them escape from poverty. It's in our national interest to do so.

The first step out of rural poverty almost always involves a boost in food production to end cycles of famine. Asia's ascent from poverty in the last 40 years began with a "green revolution." Food yields doubled or tripled. The Rockefeller Foundation helped with the development and propagation of high-yield seeds, and US aid enabled India and other countries to provide subsidized fertilizer and seeds to impoverished farmers. Once farmers could earn an income, they could move on to small-business development.

A second step out of poverty is an improvement in health conditions, led by improved nutrition, cleaner drinking water, and more basic health services. In the Asian success stories, child mortality dropped sharply, which, in turn, led to smaller families because poor parents gained confidence that their children would survive to adulthood.

The third step is the move from economic isolation to international trade. Chile, for instance, has become the chief source of off-season fruit in the US during the past 20 years by creating highly efficient supply chains. China and India have boomed as exporters of manufacturing goods and services, respectively. In all three, trade linkages were a matter of improved connectivity - roads, power, telecommunications, the Internet, and transport containerization.

Today, the skeptics like to claim that Africa is too far behind, too corrupt, to become a China or India. They are mistaken. An African green revolution, health revolution, and connectivity revolution are all within reach. Engineers and scientists have already developed the needed tools. The Millennium Villages project, which I and a group of colleagues developed, is now rapidly expanding in 10 countries in Africa and is showing that this triple transformation - in improved agriculture, health, and connectivity - is feasible.

Improved seed varieties, fertilizers, irrigation, and trucks have all helped convert famine into bumper crops in just one or two productive growing seasons.

Malaria is under control. Farmers have access to capital to make the change from subsistence to cash crops. Children are being treated for worms and receive a midday meal to help keep them healthy and in school.

Riaz Haq said...

Pakistan could replace India as the biggest recipient of British bilateral aid, according to the Guardian newspaper:

Britain is to stop sending direct aid to Burundi and Niger, two of the world's poorest countries, the government announced as it unveiled plans to rebalance the £8.4bn international development budget.

The two African nations, which are ranked second and fourth respectively in a World Bank list of the world's poorest states, are among 16 countries that will no longer receive bilateral aid from Britain by 2016. Direct aid will also be halted to Lesotho which is ranked 28th on the World Bank list.

Burundi, a landlocked country in the unstable Great Lakes region of Africa, is still suffering from the consequences of the Hutu-Tutsi massacres in the 1990s when 200,000 of its citizens died. Niger, a landlocked country in west Africa, depends on foreign aid for half of the government's budget.

The cuts were outlined to MPs by Andrew Mitchell, the international development secretary, as he unveiled the conclusions of two reviews into Britain's bilateral and multilateral aid programmes. Cutting aid to the 16 countries would allow Britain to concentrate its resources on 27 countries which include Afghanistan, Pakistan and South Africa.
Ethiopia will become the biggest recipient of bilateral aid over the next two years. Pakistan could become the biggest recipient of British aid within three years, with a major focus on education, British officials in Islamabad said, but only if the government reduces chronic corruption.

Just 56% of Pakistani children between five and nine years' old attend primary school, a rate that British officials want to boost to the world average of 87%. But the school system is chronically dysfunctional due to political interference, "ghost schools" and unqualified teachers. "It's an education emergency," said one official.

As well as reducing graft, British officials want to see Pakistan increase its tax collection, currrently at a disastrously low rate of nine per cent of GDP with many parliamentarians paying little tax. The Pakistani government has vowed to improve education spending from two per cent GDP to seven per cent.

British officials said they recognised that British aid was a "drop in the bucket" in a country of 180 million people, but hoped that a targeted aid programme could "catalyse change" in critical areas like education.

Direct financial transfers to the Pakistani exchequer, which amounted to £120 million over four years under the last aid programme, are likely to be scrapped, officials said.

Riaz Haq said...

Here is an Op Ed by Pakistan's Farahnaz Ispahani published in USA Today:

Just as many Americans are expressing frustration with what they see as Pakistan's slow progress in defeating terrorism (most recently underscored by Secretary of State Hillary Clinton's visit today to Islamabad), Pakistanis are equally frustrated with the increasingly ugly anti-Pakistan sentiment in the United States. Most Pakistanis simply do not understand how cutting U.S. economic and military aid to Pakistan advances the fight against terrorism.

Pakistan is projected by many in the international news media and by some in the U.S. Congress as a purveyor of terrorism but, in cold fact, it remains its chief victim. Three thousand Pakistani troops have been killed (more than all NATO losses in Afghanistan combined). Add to that 2,000 police cut down, the tragedy of 35,000 civilian casualties and the assassination by terrorists of our country's most popular leader, Benazir Bhutto, and one might understand Pakistani exasperation. This recent al-Qaeda attack on a Pakistani Naval Base in Karachi, killing 10 of our sailors, again demonstrates that Pakistan is the principal target of terrorist rage.

How much of our people's blood does it take for Washington to get it? British Prime Minister David Cameron said it most succinctly standing next to President Obama in London earlier this week: "Pakistan has suffered more from terrorism than any country in the world. Their enemy is our enemy. So, far from walking away, we've got to work even more closely with them."

Another Marshall Plan?

At the onset of the Cold War, the U.S. understood that political stability in vulnerable countries like France, Italy and Greece was intrinsically linked to the viability of their economies. President Truman advanced the European Recovery Plan (the Marshall Plan) that brilliantly operationalized this thesis, and by doing so saved Western Europe from communism. The same construct should be applied to Pakistan as we jointly work toward the defeat of the terrorist menace and the rebuilding of a peaceful and stable South and Central Asia.

Secretary of Defense Robert Gates has spoken of Kerry-Lugar-Berman Act for economic development, health, education, energy and infrastructure. Yet only $179 million, according to Sen. Dick Lugar, R-Ind., has actually been spent. The rest sadly has been bottled up in a bureaucratic quagmire within USAID.

The people of Pakistan, especially the poor who were most affected by last year's historic floods, have yet to feel the effects of a U.S. policy that under President Obama was to re-craft the U.S.-Pakistani relationship beyond a short-term military alliance into a sustained economic and social partnership. It is that new relationship that will be the lynchpin to the long-term stabilization of Pakistan and our ability to contain and destroy the terrorist threat to our people, and to the world.

After World War II, the Marshall Plan spent $49.06 per capita in Greece and $30.02 in Italy. Today, the per capita U.S. assistance to Pakistan, adjusted for inflation, is only $7.90. That's a dramatic 400% less than the Marshall Plan's assistance to Italy. And let us be clear: The long-term stakes to world peace are as great or greater in South and Central Asia today as in Europe at the end of the 1940s.

Hopewins said...

From my own experience of living in the US and my visits to India, I see very few Indian Muslims working in professional jobs in the United States, even though the population of Muslims in India is larger than in Pakistan...most of the Muslims here in IT jobs, Medicine, Law, Accounting and other professions are from Pakistan


From my own experience of living in the US and my visits to Pakistan, I see very few Sindhis or Baloch working in professional jobs in the United States, even though they are about 25% of the population of Pakistan...most of the Pakistanis here in IT jobs, Medicine, Law, Accounting and other professions are Punjabis with a few Muhajirs thrown in.

Riaz Haq said...

HWJ: "I see very few Sindhis or Baloch working in professional jobs in the United States, even though they are about 25% of the population of Pakistan"

I know more about Pakistani diaspora in US than you do. I have many friends from different ethnic groups living here in America.

I see the representation of various Pak ethnic groups is roughly in proportion to their urban population in Pakistan where most of the professionals come from. Punjabis make up nearly 50% of the urban population, Mohajirs 20%, Pathans 10%, Sindhis 9% and Balochis 2%.


Riaz Haq said...

Here's a Dawn report on avg 2.9% gdp growth rate in last 5 years since Musharraf's departure:

The economy grew at an average rate of 2.9 percent per annum during the last five years though GDP growth witnessed growth in financial year 2012-13 to stand at 3.6% against the target fixed was 4.3%, the yearly report published by Federal Board of Revenue (FBR) said.
The performance by the important sectors of economy like agriculture, manufacturing and services remained below their capacity. However, the recent EU approval of duty waiver in the form of awarding GSP PLUS status (Generalized System of Preferences Plus) has created much wanted space for the economy.
Duty free access to Pakistan’s exports to the bloc of 27 member countries of European Union has offered much attention for the domestic and Chinese investors. The Chinese investors have started entering into joint ventures with local manufacturers to take advantage of trade concessions. Due to these developments, the ambitious growth of textile and clothing sector has become possible. One may hope that a prudent use of EU duty concessions avoiding any caveat therein will lead towards improvement of business environment and to the desired destination of economic stability.
The economy of Pakistan continued facing various shocks since beginning of FY: 2012-13. The energy crises got complex and worsened. The security hazards vastly affected the economic and social environment. The fight against terrorism got another additional front of sectarian extremism. The extensive financial constraints, economic mismanagement and less than capacity electricity generation despite its acute shortage have been the major weaknesses in the economy. An estimate indicated that around 2% of the GDP has been washed away due to power shortage. Moreover, the challenging scheduled payments due, to the international donor agencies added further difficulties for the economic management.
However, the positive aspects of the economy included comparatively lower trade deficit, strong remittances and above 33% decline in inflation rates i.e., reduced from 11.0% in 2011-12 to 7.4% in FY: 2012-13. Some prudent measures have been taken for improvement of economy (most important step was the settlement of circular debt to the tune of Rs 480 billion which paved the way of 1700 megawatts additional electricity generation). Similarly, easy monetary policy with low interest rate during the FY: 2012-13 increased the cheap credit borrowing by the corporate sector. Resultantly, improved performance by the large scale manufacturing sector became possible and observed.
Despite unfavorable economic conditions, the FBR has been able to collect Rs 1,946 billion at the end of the fiscal year 2012-13. A growth of 3.4 percent over last year’s collection has been recorded. The FBR revenue target for the FY: 2012-13 was fixed at Rs 2,381 billion with an envisaged growth of 26.5% over last year’s collection of Rs 1,883 billion. Keeping in view the broad based challenges faced by the economy, the revenue target was revised downward to Rs 2,007 billion and expected a growth of 6.6%. The important indicators considered for assigning of revenue targets includes expected growth in GDP, the rate of inflation, level of ease in monetary policy, growth in the Large Scale Manufacturing sector, tax buoyancy, budgetary measures and imports.